Tax Timing Differences [R0310]

The Tax Timing Differences report [R0310] consists of 2 reports showing the temporary timing difference and permanent difference between tax and accounting books. Differences are caused by a difference in the classification of a lease for tax and accounting books. For example, a lease could be considered an operating lease for tax purposes and a direct finance lease for accounting purposes. Temporary timing differences eventually wash out to zero. Permanent differences arise because a portion of the asset’s cost is disallowed as part of the tax basis (e.g., half of the ITC taken when ITC is retained in full by the lessor). Therefore, the tax and accounting books have different starting points (tax basis reduction vs. full cost).

The following reports are produced:

• Tax Timing Differences Finance report [R0310A]
  This report shows the temporary timing difference and permanent difference between tax and book accounting for leases which are recorded as finance leases (loans) for book purposes and operating (true) leases for tax purposes. Only those leases with a non-operating lease type and consisting of assets with a tax reporting switch of yes are reported. If not all the assets under a lease fit the selection criteria, the asset’s percentage of schedule is used to determine what portion of lease level fields are attributed to this lease.
  
  
• The Tax Timing Differences Operating report [R0310B]
  This report shows the temporary timing difference and permanent difference between tax and book accounting for leases which are recorded as operating leases for both book and tax purposes. Timing differences, in this case, are caused by a difference in the book and tax depreciation methods of a lease. Only leases with an operating lease type and consisting of assets with a tax reporting switch of yes and a tax type of true lease are reported. If not all the assets under a lease fit the selection criteria, the asset’s percentage of schedule is used to determine what portion of lease level fields are attributed to this lease.

The report is organized by Portfolio, Company, Region, Office. The report may be accessed through the Controllers Tax report menu [R03] and may be selected interactively for:

• All leases
• A portfolio
• A company
• A region
• An office

Tax Timing Differences Selection

• ALL
  Enter X’ to report on all assets. Leave blank to report on a specific portfolio, company, region, and/or office.
  
  
• PORT
  Enter the number of the portfolio upon which to report. Leave blank if reporting across portfolios.
  
  
• COMP
  Enter the number of the company upon which to report. Leave blank if reporting across companies.
  
  
• REGN
  Enter the number of the region upon which to report. Leave blank if reporting across regions.
  
  
• OFFIC
  Enter the number of the office upon which to report. Leave blank if reporting across offices.

Tax Timing Differences Finance Report

The Tax Timing Differences report [R0310A] reports at the asset level and provides the following information:

• LEASE
  The lease number is displayed.
  
  
• SHORT NAME
  The lessee short name is displayed.
  
  
• NET BOOK INCOME
  The total lease income accrued for book purposes is displayed. Lessor, residual, vendor and investor income is included in this figure.
  
  
• NET RECEIPTS
  If reporting for tax purposes on an accrual basis, the total lease payments accrued for the current year is displayed. If reporting on a cash basis for leases considered to be true leases for tax purposes, the total lease received in the current year is displayed. If reporting on leases considered to be Conditional Sales Agreements (CSA’s), the total lease income accrued for the current year is displayed.
  
  
• FEDERAL DEPRECIATION
  The total federal depreciation for all active assets on the lease is displayed.
  
  
• TAX INCOME
  The difference between the RECEIPTS and the DEPRECIATION is displayed.
  
  
• TIMING DIFFERENCE
  The difference between the BOOK INCOME and the TAX INCOME is displayed.
  
  
• DEFERRED TAX
  The TIMING DIFFERENCE multiplied by the lessor’s corporate tax rate is displayed.
  
  
• PERMANENT DIFFERENCE
  The permanent timing difference resulting from the reduction of the depreciation tax basis when the full amount of ITC is retained by the lessor is displayed. This figure is applicable to pre-1986 leases and is an accumulation for all assets under the lease. It is calculated as follows:

  1/2 ITC
  * DEPRECIATION PERCENTAGE
  * PORTFOLIO TAX RATE

• TOTALS/GRAND TOTALS
  Page totals for number of leases and all dollar amounts are shown by office. Region, company, portfolio, and grand totals are shown for the number of leases and all dollar amounts.

Tax Timing Differences Operating Report

The Tax Timing Differences - Operating report [R0310B] reports at the asset level and provides the following information:

• LEASE
  The lease number is displayed.
  
  
• SHORT NAME
  The lessee short name is displayed.
  
  
• RENTAL INCOME
  If the rental income is on an accrual basis for tax purposes, the total lease income accrued for the current year is displayed. Otherwise the total lease payments made for the current year is displayed.
  
  
• BOOK DEDUCTIONS
  The total book deductions for all active assets on the lease is displayed.
  
  
• FEDERAL DEDUCTIONS
  The total federal deductions for all active assets on the lease is displayed.
  
  
• BOOK INCOME
  The difference between RENTAL INCOME and BOOK DEPRECIATION is displayed.
  
  
• TAX INCOME
  The difference between RENTAL INCOME and FEDERAL DEPRECIATION is displayed.
  
  
• TIMING DIFFERENCE
  The difference between the BOOK INCOME and the TAX INCOME is displayed.
  
  
• DEFERRED TAX
  The TIMING DIFFERENCE multiplied by the lessor’s corporate tax rate is displayed.
  
  
• PERMANENT DIFFERENCE
  The permanent timing difference resulting from the reduction of the depreciation tax basis when the full amount of ITC is retained by the lessor is displayed. This figure is applicable to pre-1986 leases and is an accumulation for all assets under the lease. It is calculated as follows:

  1/2 ITC
  * DEPRECIATION PERCENTAGE
  * PORTFOLIO TAX RATE

• TOTALS/ GRAND TOTALS
  Page totals for number of leases and all dollar amounts are shown by office. Region, company, portfolio, and grand totals are shown for the number of leases and all dollar amounts.

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